1998 (2) TMI 367 - AT - Central Excise

Summary

Issues:
Interpretation of Notification 95/61 and Notification 172/72 regarding exemption of waste yarn. Applicability of proviso to Notification 172/72. Time limitation for demand in case of absence of suppression of facts in show cause notice.

Analysis:
The judgment involved two appeals concerning a common issue related to the exemption of waste yarn under Notification 95/61 and Notification 172/72. The appellants argued that waste yarn, as described in the notifications, did not have restrictions on the stage at which the waste arises. The Assistant Collector, however, interpreted the notifications to pertain only to waste yarn occurring before weaving processes like beaming or warping. The appellants contended that an amended proviso to Notification 172/72 did not apply to the period in question, and previous Tribunal decisions supported their position.

The Tribunal reviewed previous decisions and noted that waste yarn could qualify for exemption regardless of the stage at which it arose, as long as it met the conditions specified in the notification. The Tribunal clarified that the benefit of the notification continued even after the introduction of the New Tariff, but waste arising after clearance for weaving would not qualify for exemption post a specific date. The Tribunal distinguished between Notification 95/61 and Notification 172/72, focusing on the latter's restriction to waste yarn arising before removal for weaving.

Regarding the applicability of Notification 172/72, the Tribunal emphasized that the restriction introduced by the amended proviso only applied from a specific date and could not be enforced retrospectively. The judgment highlighted that the demand for duty was time-barred in one of the appeals due to the absence of allegations of suppression of facts in the show cause notice. The Tribunal reiterated the Supreme Court's stance on the importance of clearly stating issues in show cause notices for demands covering extended periods.

Ultimately, the Tribunal ruled in favor of the appellants, finding merit in their arguments and concluding that the demands were time-barred and the appellants succeeded on the merits of the case. Both appeals were allowed based on the interpretation of the notifications and the absence of suppression of facts in the show cause notice.